The IFSB Council Approves the Guidance Note on Macroprudential Tools for the Islamic Banking Sector (GN-9)

DJIBOUTI, 22 December 2024 – At its 45^th meeting held in Djibouti City, the Council of the Islamic Financial Services Board (IFSB) endorsed the Guidance Note on Macroprudential Tools for the Islamic Banking Sector (GN-9).

The Guidance Note addresses macroprudential tools to mitigate system-wide vulnerabilities related to excessive credit growth and leverage, liquidity risks (i.e., excessive asset-liability mismatches and market liquidity), and structural (systemic) risks, with a focus on the specific characteristics of IIFS. In particular, it aims to:

• provide guidance on adjustments to available macroprudential tools to reflect the specificities of Islamic banking contracts (“adaptation”)
• address challenges in identifying system-wide vulnerabilities and calibrating macroprudential tools for the Islamic banking sector (“implementation”)
• make recommendations to enhance the governance of macroprudential policy according to the characteristics of Islamic banking (“governance”).

The scope of GN-9 includes Islamic commercial banks, Islamic banking windows, and Islamic investment banks. Individual jurisdictions may choose to apply the Guidance Note to other IIFS should it be considered relevant and appropriate.

The Guidance Note focuses particularly on issues that are specific to IIFS, of which some might require different regulatory treatment in jurisdictions with significant Islamic banking segments. Where issues are equally applicable to both conventional banks and IIFS, reference is made to the applicable international guidelines.

The adoption of the Guidance Note underscores IFSB’s ongoing efforts to promote a resilient Islamic finance sector and contribute to global financial stability.

The softcopy of GN-9 is available here on the IFSB website.

For more information on the IFSB, visit www.ifsb.org.